Fewer than 50 families to get National's full tax package, says CTU

Fewer than 50 families are likely to receive National's full $252 fortnightly tax break, based on the FamilyBoost scheme's lower than expected uptake, The Council of Trade Unions says.

The revelation comes as a result of figures showing just 249 families have consistently been receiving the full $75-a-week FamilyBoost rebate for ECE costs, a key plank of National's tax cuts package.

When confirming the policy last March, the Finance Minister Nicola Willis said about 21,000 families would receive the $75 a week.

Figures provided by the government show 1846 families received the full entitlement in the most recent three months the data covers, January to March. A total of 42,680 families received at least some payment from the scheme in that time, costing taxpayers more than $17 million.

And just a very small fraction of the 21,000 estimated - 249 families - were consistently claiming the full amount since the scheme began last July.

The quarterly payment approach has caught some families out and seen them receive less than the full amount because some quarters have more paydays than others.

People who have received redundancy payouts for losing their jobs have also been denied access to the scheme for that quarter.

Data IRD used not reliable

In a statement, Willis said a "significant number" of families had successfully made claims for at least some level of payment under the scheme.

"The government never expected that all households would be eligible for the maximum $75 per week FamilyBoost payment. In order to get the maximum payment families need to be spending at least $300 per week on childcare costs and be earning less than the income threshold," she said.

"However, a significant number of families are eligible for payments under the scheme, and have successfully made FamilyBoost claims. I am advised that 56,433 households have now received FamilyBoost payments, and that 74,000 households have registered for the scheme."

She said the initial estimate of 21,000 families was from IRD's advice, based on its best estimates at the time, "and - despite best efforts - they got these wrong."

Willis said the modelling had been challenging because IRD had not had reliable data about how much parents were paying for ECE.

"Essentially IRD assumed more families were paying higher childcare costs than turned out to be the case. This meant fewer families than they estimated are in fact paying more than $300 per week for childcare."

She said the scheme meant IRD now had better data about the amounts, and she and other ministers were hearing the scheme was "making a big difference to family budgets".

Labour's Finance spokesperson Barbara Edmonds said Willis needed to "stop blaming officials for her own failure to make good on her election campaign promises".

"We've been asking the Government to make the policy easier for families to access, because it currently requires families to keep invoices and make claims retrospectively which can be a bureaucratic nightmare for busy parents.

"We've also been asking them to consider an end of year wash-up, so people get what they're entitled to over the year rather than different amounts each quarter. But so far they've refused to budge.

"People voted for her based on this, she should take responsibility for it."

Edmonds said many people had found the tax cut was less than promised and was quickly being eaten up by rising costs.

"It's another broken promise by the National Party. They promised during the election up to $250 tax cut. They then had to qualify that and say up to $250, then they had to qualify that and say up to $250 if you've got a child who's two and a couple of kids at ECE.

"It's quite clear that they've had to backtrack every time for this policy so just fall on your sword, make it easier for families to access this.

"We're in a cost of living crisis, and this is what families need right now."

She said the complexity of submitting invoices to be able to claim the quarterly payment would be part of the reason for the low uptake, and the government should "absolutely" have been active as soon as it was clear it would be difficult to administer.

"I'm a mother, and I know how hard it is to make ends meet for a lot of our families particularly here in Porirua. The government should be trying as hard as possible to make it as easy as possible for families."

Number much lower than estimated

The Council of Trade Unions' chief economist Craig Renney, who is also a member of Labour's policy council, told RNZ it meant the number of people likely to receive National's full tax package of $252 a fortnight was now much lower than the 3000 the party estimated during the election campaign.

"It's just an estimate at this point because we'll need to wait for the final full data to come in [but] less than around 50 families will be getting that full number... likely to be a number much closer to 30 now," he said.

That figure was based on the 249 families who had consistently been getting the full FamilyBoost rebate, but Renney said that was using some "very generous assumptions".

Even based on the higher figure of 1846 in the latest quarter, the maximum number of families eligible for the full tax package would be about 170 people, he said. He felt people had every right to complain.

"That cost of living challenge hasn't gone away, but certainly the support for those families hasn't turned up in the way that the government was proposing when in opposition."

Renney said the Minister should have been keeping track of the numbers of people eligible, and changing the settings to ensure families would get the benefit of the policy as promised.

However, the government was also benefitting because the lower-than-expected uptake meant the cost of the FamilyBoost policy would be cheaper.

"The government's books will look slightly better than they should have at the budget, because that money isn't being paid out to families in the way that we thought previously."

It was the first policy unveiled in Christopher Luxon's state of the nation speech in March 2023 ahead of that year's election campaign, promising a 25 percent automatic rebate on early childhood education costs, paid fortnightly.

Families earning $140,000 a year or less would be eligible for the full amount, with reduced amounts available to those earning up to $180,000 - at which point the scheme cuts off.

Labour at the time said it was "not very well thought through," and warned costs could blow out if it encouraged families to increase their use of ECE.

Once in government, the scheme was put into practice, but with a twist: the automatic fortnightly payments would be too difficult to implement in the short term, so it would instead be paid out every three months], with parents and caregivers required to collect invoices from ECE providers to be able to claim the cost back.

The government also revised down the total cost of the scheme from National's $967m over four years estimate, to $723m over four years.

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